The Motley Fool

Stock market crash: Anglo American, Rio Tinto, Glencore, and BHP share prices are rising. Here’s how I’d invest in these FTSE 100 stocks

Going by yesterday’s FTSE 100 movements, I think we’d be forgiven for thinking that we’re in the midst of a boom rather than a slowdown and prepared for a second stock market crash. Multi-commodity miners like Anglo American, BHP, Rio Tinto, and Glencore made gains. In fact, as I write, they are still rising. Typically, miners are cyclical stocks, which means they tend to perform better during upturns. A Reuters report ascribed the rise to improved data on the Chinese economy, which saw a bounce back in industrial production. 

China’s impact on mining

This may well be the case. But it’s only the starting point for long-term investors who may now be tempted to consider buying FTSE 100 mining stocks. I’d ask at least two more questions before buying. The first is: Even if the Chinese economy has shown signs of recovery, is it sustainable? And relatedly, how far does it impact miners?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

As far as the Chinese economy goes, it is expected to grow at 1% in 2020 according to the IMF. I think that’s a positive, given the severity of the clampdown on economic activity seen this year. But, clearly, this is also a vast decline from the over 6% growth seen in 2019. The 2019 level of increase isn’t going to be seen even in 2021.

China dominates global metal demand. So, slow growth there can tell on the future of the metals and mining industry. I’d also keep an eye out on the US-China trade war, which is quickly seen as developing into a new cold war. This could also keep metal demand comparatively muted. 

Company level performance of FTSE 100 miners

The next question I’d ask before buying any of the metal stocks is: How is each of the FTSE 100 miners placed for the near future? For instance, Glencore has struggled with graft charges in the recent past. Similarly, Rio Tinto recently came under fire for indiscriminate mining decisions, which led to its CEO stepping down. These may well impact the share price of these FTSE 100 stocks over time. If charges against GLEN are proven right or RIO takes a long time to hire a new CEO, investors could start losing confidence in these stocks.

However, there are other drivers for stock prices too. I think it’s key to look at the financials. The good news is that all four of the FTSE 100 stocks are robust. They are also all profit-making, except GLEN, which recently reported losses. The longevity and size of these companies also inspires confidence, making them potentially good investments in the long run. For this reason, they also have an advantage over smaller and younger mining companies. As long as they are able to capably manage issues that may arise, as in the cases of GLEN and RIO, irrespective of stock market crashes and recessions, I think they can prevail and be profitable for investors. 

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Manika Premsingh owns shares of Glencore. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.